Thursday, October 24, 2013

Accusations that the NSA has listened in on Chancellor Merkel's conversations are not conducive to positive German-US relations. Interestingly, the fact that the White House is saying that they 'are not' monitoring and 'will not' monitor Merkel, suggests that 'they have' monitored her in the past. To be sure, as I noted yesterday, there are worthwhile reasons behind US intelligence collection operations in Europe. Still, targeting the phone of a close ally (especially a head of state and especially one as friendly as Merkel) is a dangerous gamble. It risks significant blowback in terms of personally alienating a valued American friend. The NSA will have known this. Correspondingly, I assume that Merkel was targeted for a short time and in pursuit of specific information. Perhaps in regards to her position during a conference/financial negotiations (international meetings are a playground for intelligence officers).

There's another point here; as Marc Ambinder (a top journalist on the NSA) notes, if Merkel was indeed targeted, then why wasn't her position as an intelligence source more highly classified? Ambinder hints at the larger truth. If she was monitored, Merkel was effectively a deep cover source. In that regard, it's truly ridiculous that Snowden was able to gain access to such an operation. He was a contractor, not the Director of the NSA. As I've argued before, the US Government has a serious problem with its protection of its highly classified sources.

Of course, all of this raises the broader question as to what other information Snowden might have given Greenwald. Does he have agents/officers details? The British certainly think so. Based on what's happening at the moment, we must assume that Greenwald is upping the ante. This may signal how he'll conduct himself at Omidyar's new media endeavor. Ultimately, this is what will most concern the US Government - signal intelligence programs can be reconstructed. Humans cannot.Related links.

Look, I get that the French Government is angry. As a result of Snowden's leaks, President Hollande is being forced to navigate a tripartite political
minefield - expressing dissatisfaction to sate populist anger, but doing so in
a way that averts damage to the US relationship and avoids undesired
attention from flowing towards DGSE SIGINT programs. This last point is of
critical importance. French Intelligence doesn't simply collect on security/foreign policy related targets, they attempt to siphon data from US Intelligence platforms and they aggressively target private companies - engaging in industrial espionage of the type that characterized the KGB. They also monitor French citizens with zealous alacrity. In short, their behavior is far from sanctified.

But let's be clear, the NSA related accusations are far
from surprising. Informational awareness is a cornerstone of
international diplomacy. It makes sense and it's nothing new. As Susan Rice (apparently) put it, ''[NSA activities at the UN] helped me know... the truth, and reveal other
[countries'] positions on sanctions, allowing us to keep one step ahead in the
negotiations.'' As I've noted before, the US has understandable
reasons to spy on European allies - interests align at certain junctures and
separate at others.

All of this speaks to a broader point. No alliance is
perfect. The US-Israeli intelligence relationship provides one such example of
this truth. Ultimately, deep trust is contingent upon a long term, proven relationship. Like that of the 'five eyes' community (and specifically the
US-UK intelligence alliance). Even then, complications are still present.

In the end however, defining interests define a relationship. As
was the case with Brazil, this minor scandal will die down.
Its perpetuation serves neither France nor the United States.

Concerning the reports of US intercept operations in France, please read my relevant thoughts here and here. I'll write more on this issue later today, but France has no moral authority to complain about US Intelligence activities. The DGSE is hardly a SIGINT saint...

Sunday, October 20, 2013

This is a guest post from Alex Lenchner aka 'Curious Leftist'. He's an Economics specialist with a keen mind and a fine pedigree for analysis and debate - make sure you check out his excellent blog/s. I'm excited to host this post - while I disagree with some of his opinions, Alex reminds me that left-right political engagement is crucial. In the end, whatever our political colors, the vast majority of us seek a just, prosperous American future. I digress... Over to you, Alex!

One of the things I've
noticed in politics is the way Republicans misunderstand or ignore
liberal arguments against inequality. And to to be fair, income
inequality is a tricky subject to talk about. Even the very best of
economists struggle to find the best way to measure inequality. There
are different types of compensation, e.g. labor income (wages),
benefits, and transfers. There are different ways to measure income
inequality, e.g. at the individual, family, or household level. There
are also things that we should consider like hours worked. And don't
forget that pesky thing called inflation. Trying to put all of these
factors into an empirical paper can be a real mess, so on some level,
I understand the lackluster debate over income inequality. But
despite these complications, two things are clear when looking at the
data, decoupling and income growth divergence are real and sizable
(1). These are two incredibly important problems that show how income
inequality has been growing the past few decades.

More often than not,
most people can't even get past step one. The conventional debate on
the subject is rife with political rhetoric that obscures the issue
and gets us nowhere. Don't get me wrong, there are some right leaning
economists and academics that cut right through the talking points
and get straight to the heart of the problem. The points they bring
up and issues they raise are good for the political debate and they
help bridge both political parties to a sort of mutual understanding.
But these people are often in the minority and there voices aren't
heard all that often. The people I'm primarily talking about are
Republican politicians, members of the GOP, right leaning
journalists, and plenty of others. Even many on the left are bad
about this. So with this in mind, it would be beneficial to some
clarity on the issue.

There are 4 main issues
I have with Republican arguments on inequality:

The false dichotomy between growth and distribution

While
too much government regulation may be a problem, it isn't the
problem

Income inequality is not purely due to individual initiative.
Instead, it is mostly an institutional phenomenon

Liberals
are not against income inequality per se

The
False Dichotomy between growth and distribution

This
I see all the time, especially from Paul Ryan, a GOP favorite. Take
this quote: “Are we interested in treating the symptoms
of poverty and economic stagnation through income redistribution and
class warfare, or do we ant to go at the root causes of poverty and
economic stagnation by promoting pro-policies that promote
prosperity?”

This
is a classic example of a false dichotomy. We can either redistribute
income or promote
economic growth, but not both. But liberals often talk about
inequality because it can hampergrowth.
The fact is, high levels of inequality can lead to a less efficient
and productive economy. Cutting public investment leads to
under-investment in infrastructure, R&D, and education at multiple
levels (2). The ways firms treat their workers and the amount workers
are paid all factor that go into worker productivity. In fact,
fairness is a very important factor that goes into worker
productivity and motivation (3). Although the idea of “fairness”
is rarely clear and has a heavy degree of subjectivity, there is a
growing sense that the present disparity in wages is unfair. And
there is some date to back this up, as the wedge between wages and
worker productivity has risen considerably since the 1970s:

Factor this with the rapid rise in executive pay (4), then there will
be a feeling of unfairness throughout the economy. So with this in
mind, redistribution, i.e. changing marginal tax rates on the 1
percent (or through some other method of taxation) to help increase
public investment and lower the gap between worker and executive pay
could increase productivity and efficiency in the economy. We can
redistribute wealth, thereby reducing income inequality, and make the
economic pie bigger.

While too much
government regulation may be a problem, it isn't the problem

Many
Republicans and Conservatives like to make the claim that government
regulation is primarily to blame for income inequality, “In
just about every speech they give examples of small businesses trying
to do something and being blocked by government regulations. The
Republicans are not whistling Dixie here – they are sinking their
teeth into very public angst about government being too large.”

All
of these stories amount to mere anecdotes. While government
regulation is certainly a problem for our economy, it isn't the
problem.
No political institution is perfect. Interest groups are going to
have some influence on the political process and there is bound to be
excessive regulation over some sectors in the economy. But to say
that regulation is the primary reason for our present state of
inequality just ignores history. The fact is, inequality has been
rising since the 1970s. Over this period we've had a number of
presidents with various economic policies and doctrines. Yet despite
the continuous dynamic shift between more and less regulation over
several administrations, inequality has continued to increase. What
the right seems to underestimate is the importance of monopoly rents
and the increased monopolization of markets as a result of imperfect
information, network externalities, and anti-competitive practices.
Other factors like regulatory chapter and inadequate enforcement of
laws also play a role, but that's different from regulatory burden.

Income
inequality is not purely due to individual initiative.

You
don't normally see this claim from the right, that inequality is
purely due to differences in individual initiative, but it sometimes
pops ups (5). Inequality is shaped by individual and market forces,
but individuals and markets don't exist in a vacuum. They are
constantly being shaped by thing like the government, social rules,
institutions, and other structural forces. Skilled manufacturing jobs
are being replaced by unskilled service sector jobs. Skill biased
technological change has replaced many unskilled workers with
machines. Financial liberalization and free capital movements have
resulted in global financial stability, causing unemployment on a
large scale. Even things like racial and gender discrimination are
still alive and well (6). And this just scratches the surface.
Looking at this from a common sense approach and blaming inequality
on laziness and lack of effort might seem practice, but it ignores
decades, if not centuries of research and theorizing. With this in
mind, it would be absurd to attribute inequality solely on individual
initiative.

Liberals
are not against income inequality per
se

Many on the right have
perceived the liberal crusade against inequality as a desire for
“equality of outcomes”. And you see this claim a lot (7). But
it's nothing but a strawman and shows the true extent of how many
Republicans and GOP members misunderstand the liberal position on
inequality. Inequality is going to happen in a market economy. The
desire for profits and gain is a vital component in the capitalist
system and it's bound to lead to inequality of varying degrees. And,
for the most part, capitalism is a great system, and I've seen very
few liberals attack the institution outright. What liberals emphasize
are the things that constantly influence markets, e.g. institutions,
social rules, norms, habits, and a ton of other factors. Some of
these structures and constraints are good, some bad, and some
negligible. But many of these factors lead to imperfections in the
market system and cause differences in well being across the board.
Often, these differences in outcomes aren't due to individual
actions. It things like this that liberals are concerned about, and
believe that a number of institutions, like the government and
unions, can help fix. Will the process be perfect? No, and it would
naïve to think otherwise. But it's better than ignoring the problem.

While you might see
some liberals make very dumb comments, you shouldn't extrapolate
those examples to all liberals. The fact is, liberals and many on the
left are primarily concerned with equal opportunity, not equal
outcomes.

Conclusion

Now,
none of these arguments I made are original in any sense, but I hope
they provided some clarity on an issue that is often obscured by
political games. I definitely used vague phrases like “the right”
and perhaps I generalized too much. But with that aside, the only
way to make any real headway on the problem of inequality is to find
a common ground between both political parties. And the only way for
that to happen is for those on the right to better understand the
arguments those on the left and vice versa.

As
Ben Bernanke notes: “First,
since the 1970s, R&D spending by the federal government has
trended down as a share of GDP, while the share of R&D done by
the private sector has correspondingly increased.Second,
the share of R&D spending targeted to basic research, as opposed
to more applied R&D activities, has also been declining. These
two trends--the declines in the share of basic research and in the
federal share of R&D spending--are related, as government R&D
spending tends to be more heavily weighted toward basic research and
science. The declining emphasis on basic research is somewhat
concerning because fundamental research is ultimately the source of
most innovation, albeit often with long lags. Indeed, some
economists have argued that, because of the potentially high social
return to basic research, expanded government support for R&D
could, over time, significantly boost economic growth.”
(http://www.federalreserve.gov/newsevents/speech/bernanke20110516a.htm)

Joseph
Stiglitz highlights an important case study that demonstrates these
effects: “A
detailed case study by Krueger and Mas of the plants that
manufacture Bridge/Firestone tires provides a particularly chilling
illustration. After a profitable year management demanded moving
from an eight-hour to a twelve-hour shift, which would rotate
between days and nights, and cutting pay for new hires by 30
percent. The demand created the conditions that led to the
production of many defective tires. Defective tires were related to
over one thousand fatalities and injuries until the recall of
Firestone tires in 2000”.

Lucian
Bebchuk and Yaniv Grinstein concluded in their empirical study on
the growth in executive pay, “the
analysis indicates that the growth in pay levels has gone far beyond
what could be explained by the changes in market cap and industry
mix during the examined period. The growth of pay involved a
substantial rise in the compensation paid to the executives of firms
of a given market cap and industry classification. Although
equity-based compensation has grown the most, its growth has not
been accompanied by a reduction in cash compensation.”
(http://www.law.harvard.edu/faculty/bebchuk/pdfs/Bebchuk-Grinstein.Growth-of-Pay.pdf)

Friday, October 18, 2013

16 days overdue, thus ends an
American take on Monty Python. Without the satire.

The White House has preserved
ObamaCare, Democrats have won clean resolutions and the GOP has been humbled
into a very public and very bloody retreat.

For Republicans, there are only
two positives.

First, with this deal, the Senate
Minority Leader, Mitch McConnell, has probably saved the GOP from being
vanquished in next year’s Mid-Terms. Second, McConnell has challenged the
President to live up to his word and engage in serious negotiations (my take on 'serious') before next
January. In short, McConnell has given CPR to a party drowning in emotion.

For leading the GOP off its Maginot Line, McConnell deserves the gratitude of all conservatives.

Unfortunately, he won’t get it.

Instead, the
very opposite is likely to occur. Conservative firebrands will rage against his
‘betrayal of conservative values’. McConnell’s primary challenger, Matt Bevin,
can expect his campaign coffers to brim. After all, for a loud but vocal
conservative minority, compromise is treason. A capital crime. This insipid absolutism can’t
continue. It’s time for us, the majority of conservatives; the ‘quiet
conservatives’, to bring reason back to Republican politics.

For a start, we need to recognize
what we’re up against - that there are those in our movement who see ‘purity’
as their defining cause. That for these conservatives, politics isn’t about
asserting an agenda, it’s about purging the ‘ideologically impure’. We need to
recognize that these partisans see themselves as the modern incarnations of
John Stark’s heroic toast, - ‘’Live free or die; death is not the worst of
evils.’’ That for these men and women, political death is preferable to compromise.

Next, we need to point out the
fallacy of their argument.

Let’s cut the faux patriotism,
ObamaCare is not the British Army and this isn’t the Revolutionary War. In their struggle, Stark and his
comrades were fighting for an ideal that was both pure and possible – freedom
and independence.

Neither was true with regards to
the GOP strategy on ObamaCare. As I argued earlier this week, demanding that
Obama sacrifice his landmark law was always
implausible. Democrats control the Senate and the Executive. The Judiciary
has rendered its decision- the law conforms with the Constitution. The polls
were also clear- Americans might dislike ObamaCare, but they disliked the GOP’s
brinkmanship even
more. On top of it all, Obama had a post-Syria
necessity to project clear leadership.

Unsurprisingly, the news coverage
has reflected this understanding. Instead of focusing on the absurd
incompetence of the ObamaCare rollout, the media set up camp on a different
story – one centered in a Republican celebration of rudderless obstructionism. A
political opposition marching in perfect step with Democratic propaganda. A
modern tea party… without the tea.

For conservatives, this strategic
delusion speaks to our burgeoning fetish - self-immolation at the shrine of partisan
resistance.

Over the last two weeks, the
House GOP has rendered itself the governing equivalent of a skydiving team
without parachutes- for two minutes, soaring ecstasy as the jumpers sail through
the clouds. Until terminal velocity meets certain gravity. Then truth renders
its judgment – the illusion of omnipotence at an awful price. Self-destruction is the nemesis of political reason.

If we’re serious
about preventing an American welfare state, we conservatives need to get
serious.

We need to grasp the virtuous
truth- that Political leadership demands both courage and rationality. That in
a democracy, believing alone isn’t enough. In the end as with all arguments, political
success requires presenting a case, persuading voters and pursuing change.

The alternative is what we’ve
seen today. A gleeful Democratic party, a preaching President and a Republican
brand that’s bobbing in the sewer.Please watch video below for my thoughts on broader issues involved.

Thursday, October 17, 2013

Regarding the newly released CCTV footage from the Westgate Mall attack (see video below), please consider my thoughts for the National Review.

Let's be clear, violent Sunni Salafist extremists are exceptionally foul individuals. Theirs is an unrepentant blood lust pursuant to a brutally uncompromising ideology. Where other terrorists seek to force their adversaries to the negotiating table, groups like Al-Shabab seek to 'purify' the world. They are the enemies of everything that modernity holds dear - democracy, minority/women's rights and secular governance... They want to destroy it all.

Friday, October 11, 2013

As we learned this week, adult Americans are struggling to grapple with the globalized world. If we don’t address this challenge soon, a day
will come when American competitiveness is a dream of the past.

It's time for new thinking.

For my two cents, beyond the five suggestionsI offered yesterday, I also believe three further solutions can be found in the UK private school system. First though, a caveat. UK private schools (known as independent or public
schools) are imperfect - pervasive 'old boys
networks' are negative for society. This being said, in terms of character development and educational orientation, the British
private school system has much to offer America.

1) Enforcing
Discipline - The reinforced expectation of good conduct is paramount to a successful
schooling environment. This is true for individuals and for a schooling group more generally.
Absent discipline, teachers waste time managing the ringleaders
of disruption rather than teaching those who want to learn. Many American children suffer the
consequences of this dynamic. But in the UK private system, it’s
different.

In British private schools, unmistakable authority garners effective learning. Under this system, escalating punishments flow with a
culture of expectation. Students understand that their personal
reputation is contingent upon their positive behavior. When students face serious
consequences for ignoring that understanding, discipline flourishes without the
need for regular remedial action.

Ultimately, this structure cultivates a sub-conscious appreciation for good conduct - students behave because behaving is the
norm - 'it's what's done'.

2) Finding
Individual Purpose
- Rather than considering sporting excellence as the defining
tenet of institutional esteem, in the UK private system, students are
recognized under a broader orbit of consideration. Further, by injecting varied student pursuits into an intra-school competitive environment (the 'House
System'), students gain peer support for their individual endeavors.
In turn, this builds a notion of unified purpose. This 'identity' is
accentuated by school uniforms - impressing the understanding that all students start
from an equal foundation.

3) Building
a Tradition
- This is critically
important. By attaching
students to a historic legacy that reaches across generations, British private
schools inspire successive year groups to strive for excellence. At a basic level, students are made to feel that they
belong to an identity of timeless value. This is important for two reasons. First,
it inspires integrity whilst at school. Second, it encourages former students to honorably 'represent' their establishment long
after they've graduated. This 'tradition' is most evident in the many students who elect to pursue careers in the British Government/Armed Forces.

Practicality of US application

Implementing these lessons would require strong leadership from local school boards and principals. It
would also demand flexible commitment on the part of the teachers who
would lead the reforms. Nevertheless, the key tenets of this approach -
fostering a unity of purpose, inspiring an ethic of hard work and attaching
students to a lifelong institution, would find a strong base in American
culture. They would not be cost prohibitive.

Thursday, October 10, 2013

The chart says it all. When it comes to literacy and numeracy, Americans are far from exceptional.

The OECD’s report into adult skills is a much needed wake-up call. In our age; the age of the globalized economy, a cavalier attitude to education won’t cut it any longer. Here are five specific inadequacies that we need to address.

1) Educational Management

Ultimately, education is about fostering intellectually curious citizens. ‘Fostered curiosity’ is critically important. After all, mandatory schooling ends at age 18. When we graduate from High School, it’s up to us to decide whether we pursue greater knowledge or skills. However, unless our preceding educational background is positive – unless we see value in knowing more, our interest in learning will atrophy. This is a basic fact of pivotal importance; as the OECD report notes, facilitating lifelong learning is paramount. Yet, instead of embracing the facts, schools across America are hampered by an excessive bureaucracy that punishes learning. Take the SAT. With its multiple-choice fetishism and its defining influence in college admissions, the SAT is both intellectually retrograde and omnipotent in its shaping impact. In forcing teachers to ‘teach the test’ rather than spark knowledge, the SAT teaches students to regard their education in a perniciously one dimensional manner. In doing so, it fails to encourage exceptional students and it fails to support struggling students. It defers developmental curiosity to college. In the end, the costs are clear. Those students who don’t go to college? They’re left behind. Those who do go to college? They have to learn how to learn.

In America today, true learning is a privilege for the few rather than a right for all. We need an education system that enshrines testing in creative thought as well as retention of facts.

2) Educational Culture

As in South Korea and Japan, we must come to realize that the responsibility for an education does not end at the school gate. That in fact, parents have a central role in helping their children learn. Our national ‘blame the teacher’ syndrome is an indictment on our burgeoning spoon fed society – expectation without endeavor. From both the left and the right, we need to empower parents with the tools to know if they’re children are being well served. The George W Bush Center's Global Report Card is a good example of one such tool. At the same time, while our teachers deserve respect, teachers unions deserve scrutiny. Children are the future of American, they’re not political pawns.

Let’s be clear, until we get real about our educational culture, we’ll be unable to win the skilled, well-paying jobs of the future.

3) Costs v Outcomes

America spends a great dealon education. Yet, as the OECD study and countless others prove, skill based outcomes do not correlate with our investments. One major problem is the scarcity of merit based reward systems. When the best teachers have two choices – to either to take employment at private schools which offer the best income, or serve in poorer school districts that cannot afford to reward their talents, the consequence is a growing equality-opportunity gap. Equally crucial, we must break education funding away from hypothecated county taxes – educational opportunity must not be shaped by the wealth of one’s locality. We also need to empower Principals with far greater control over their budgets - both in terms of hiring/firing and setting individual compensation levels. Indeed, in appointing principals, we should look beyond the education sector for leaders in business and other public policy areas.

Of course, even as we address middle-high school education, we must also face up to the reality that American colleges are simply too expensive for too many who leave school to continue their studies. A skills based future demands more than chucking Federal grants and hoping for the best. We need to pressure higher education facilities to bring down their price tags.

4) Discipline

Speak to a teacher and they’ll likely tell you that they spend nearly as much time dealing with disruptive students as they do teaching. That has to change. Linking with parental responsibility, we should consider extending truancy fine into the classroom. Sustained poor behavior = parents get an invoice. It’s true, many will howl at the very notion of such a proposal. Regardless, we can no longer allow a few individuals to damage the futures of their peers. That approach is morally unjust and in societal terms, it’s also profoundly idiotic.

5) Sport

America is obsessed with high school sports. In one sense this is good – our celebration of shared athletic excellence is an intrinsic part of our American community spirit. Still, though sporting success may help students gain admission into college, few such students will become professional athletes. In this vein, academics must come first. We have to ensure that students possess the basic skills that they’ll need to succeed outside the major leagues. Additionally, we need to do more to recognize those students who excel in fields beyond sports. Whether art, math, debating or football, individual excellence should be judged on merits rather than form. As George Gershwin, Mark Twain and Steve Jobs attest, individual excellence isn't predicated in the movement of a ball.

In the end, we must take heed of the modern age. As a people, our relentless ‘can do’ attitude has always been our greatest ally. It’s what the world most respects in us. Yet divorced from skill, hard work alone is no longer enough. Ultimately, America’s limitless potential has always taken root in our binding of social aspiration to individual ability.